An edge preserving image coding scheme which can be operated in both a lossy and a lossless manner was developed. The technique is an extension of the lossless encoding algorithm developed for the Mars observer spectral data. It can also be viewed as a modification of the DPCM algorithm. A packet video simulator was also developed from an existing modified packet network simulator. The coding scheme for this system is a modification of the mixture block coding (MBC) scheme described in the last report. Coding algorithms for packet video were also investigated.